Trading, in general, online or offline can be a risky thing. You can never be 100% sure whether you are getting a good deal. This is especially true when it comes to trading online though, as there are more elusive and elaborate frauds out there.
When you also consider the fact that the interest in trading is rapidly rising in the past years, you end up with more sketchy trades as well. Higher the profit chance, higher the possibility that someone is going to try and profit in a fraudulent manner. So, how do you combat this problem when online trading?
Well, that is the exact reason why this article is here to help. You can do some things to combat the possibility of a fraudulent trade, but you need to be vigilant. As we’ve mentioned in the very beginning – you can never be 100% sure. But, if you want to know how to spot the potential frauds and differentiate them from authentic online trade – keep on reading!
Does it look too good to be true?
Well, let’s start with the most common way in which people are lured into a fraud. You must have, at least at some point, run into huge promises that make it seem like you can get rich quite easily. It seems like a cliche, but earning a huge amount of money by doing little is the dream, and such frauds work like a charm. Who wouldn’t want to be able to earn thousands of dollars in five minutes? Well, no matter the temptation, don’t fall for these scenarios. The probability is high that if it looks too good to be true – the probability is extremely high that it is indeed too good to be true.
These scenarios are indeed problematic due to the fact that you can indeed earn a lot quickly with online trading. This is especially true when it comes to those that know how to trade forex well, but in order to do so, you need to understand the realistic expectations. The only difference between those that can and can’t spot a fraud regarding unrealistic promises is whether they are well familiar with realistic trading profits.
Newcomers are the most targeted traders
As expected, the largest sum of traders that actually end up not making a difference between authentic online trades and frauds are the beginners. People who commit fraudulent trading understand that the lack of knowledge and experience is the key to whether someone will fall for the fraud. If you are a beginner, you can’t gain experience overnight, of course. But, the thing that you can do is to gain the knowledge necessary before seriously investing yourself in online trading.
This might be a given for some, but you would be surprised how many people start getting into trading without a lot of previous knowledge. Trading recklessly can only get you so far.
So, always be sure that you know what you can expect in online trading. If you know how things work in general, you will be more likely to spot the nuances when it comes to frauds. This is especially true due to the fact nowadays, frauds can be very hard to spot to an outside observer. Learn everything that you can from various sources before you start trading online!
Make sure that you know about the reputability of your broker!
No matter what you are trading online, the only safeguard that you can rely on is how reputable your broker is exactly. If you aren’t sure about the reputability of your broker, you should never trade like that. So, that is obvious enough, but how can you check whether your broker is reliable?
No matter whether we are talking about robot types of brokers, or those that are signal services, they all should have some sort of licensing to prove their worth. Of course, you want to look for the more recognized licensing rather than just a random one. So, what are the common licenses that you should look for? The two most reliable one is Cyprus Securities and Exchange Commission. You might find it in the shortened version – CySEC. Another reliable license is the one by Commodity Futures Trading Commission.
Always check for free demo accounts!
A great way to test whether a certain broker platform works for you or not is to try a demo version. Such demos are also a great way to see whether the broker is a scam or not. So, if there is the possibility of trying a free demo account first – make sure that you do that. You will not risk losing any money, and you will easily be able to see whether this is a real broker or not. If you run into a scam, the probability is high that you will be met with a dummy website and nothing more as the goal is to take as much money as possible.
Try and find some reviews and feedback
The last piece of advice on this list but definitely not least is to look for the experience of those before you. The Internet is very useful for checking for reliability, because if there is an undeniable history of trading frauds online – there will be a user that has written about it somewhere. So, make sure that you look at various forums using the name of your broker as a keyword. There also are websites where you can directly check for reviews regarding the broker in question. It’s always better to learn from someone else’s online trading mistakes rather than from your own!
In the end, it all boils down to knowing what are the most common ways in which someone might try to trick you. Always keep an eye out for deceit, do not, for whatever reason, take authenticity as a given. Do your research on your brokers, look for reviews, install only the most reliable programs. It is mostly up to you to spot these frauds, and after reading this article, you have learned about ways in which you can do so.
We’ve said it previously and we’ll say it again – online trading can never be not-risky. So, always continue doing your research on ways to look for an authentic online trade. Stay on top of what to look for, and you will surely be less likely to end up stumbling upon a fraud. Good luck trading!
